Ofwat announces cut in water bills

Households will see a £3 fall in average water bills to £340 before inflation over the next five years, industry regulator Ofwat has said.

The watchdog's final decision on prices for 2010-15 is less generous to consumers than the £14 before inflation cut first proposed in July.

Ofwat said its decision to leave prices broadly flat still meant bills would be £34 or 10% lower on average than under plans submitted by water companies.

But whether bills rise or fall will depend on where customers live. Customers of Essex and Southern Water will face the biggest jump in prices - 13% over the period - with Bristol Water's bills up 7%.

The UK's biggest water company, Thames Water, will be allowed to raise prices by 3% compared with Ofwat's initial call for flat prices from the firm.

But in other areas, customers of Anglian Water and Welsh Water will see price cuts of 7% over the five-year period.

The Consumer Council for Water gave Ofwat's final decision "seven out of 10" and said the regulator's original price cutting plans were "arguably unrealistic".

But Ofwat chief executive Regina Finn said: "Customers have told us that they want us to keep water and sewage charges flat while maintaining a safe, reliable supply of water. That's what we've delivered.

Ofwat's decision to keep bills largely flat comes as the regulator unveiled a record £22 billion programme of investment in the network - about £935 for every property in England and Wales.

The bulk of this money - £12.9 billion - will be pumped in to maintain and replace assets from pipes to water treatment works. There will also be £1.1 billion earmarked to help prevent sewer flooding.